THE Power Sector Assets and Liabilities Management (PSALM) on Tuesday warned of a nationwide power shortage if its funds will be garnished in connection with a labor case involving the National Power Corp. (Napocor).
Emmanuel Ledesma Jr., PSALM president and chief executive, said if their funds are garnished, their long-term debts would become immediately due and demandable.
“This will result in operating cash deficit, which will lead to a power shortage nationwide,” Ledesma added.
He explained that under PSALM’s loan agreements, garnishment is a ground for default, which will activate the payment acceleration clause.
Given cross-default provisions, he added, an event of default in one loan will cause default in other loans.
Consequently, PSALM would be obligated to instantly settle outstanding obligations amounting to P329 billion (as of June 2014).”Without any budget allotted for this unscheduled expenditure, PSALM would have to rely on the national government for support through advances or on-lending arrangements, which would entail additional government borrowings,” Ledesma said.
As a result of insufficient funds to cover operational requirements, he said, PSALM’s performance of its responsibility to ensure energy security will be rendered difficult, if not impossible.
PSALM is responsible for the fuel supply and operations budget of its own power plants, namely the Malaya Thermal Power Plant in Luzon, Power Barges (PB) 101 and 102 and Naga Coal-fired Thermal Power Plant in Visayas, and PB 104 in Mindanao, all of which produce around 430 megawatts in dependable capacity.
PSALM is also obliged contractually to provide for the fuel requirements of Independent Power Producer (IPP) plants, namely Ilijan Natural Gas Power Plant in Luzon, and the Zamboanga and General Santos diesel power plants in Mindanao.
Furthermore, Ledesma explained that if the Independent Power Producer Administrators (IPPAs) allow the garnishment of monthly and generation payments to PSALM, PSALM in turn would be unable to pay capacity and other fees for the IPPs in a breach of its contract.
PSALM is contractually responsible to pay for the capacity fees for the following power plants with appointed IPPAs: Bakun, Ilijan, Pagbilao, Sual, and San Roque.
The capacity/energy fees for the following power plants without IPPAs are, in contrast, PSALM’s direct obligations, which will also be adversely affected: Benguet, Caliraya-Botocan-Kalayaan, Casecnan, General Santos, Mindanao, Mt. Apo 1 and 2, Unified Leyte, and Zamboanga power plants.
PSALM also collects and administers the universal charge for missionary electrification, which is the source of funds of the NPC for its operations in off-grid areas.
Because of this, Ledesma urged recipients of what he described as the patently void notices of garnishment to exercise prudence.
The sheriffs of the Regional Trial Court-Quezon City Office of the Clerk of Court and Ex-officio Sheriff earlier issued notices of garnishment to PSALM’s banks, customers, and other energy industry partners, purportedly in accordance with the Supreme Court Special Third Division’s Resolution favoring the claims of NPC Drivers and Mechanics Association.